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Debate over Colorado drilling regulations begins

By KRISTEN WYATT Associated Press

Posted:
03/21/2013 02:03:27 AM MDT

Updated:
03/21/2013 05:32:08 PM MDT

DENVER—Oil and gas drilling started to come under review Thursday by Colorado lawmakers, who are poised to abandon their traditional hands-off role and take up a raft of measures to tell state regulators how drilling should be controlled.

First, a House panel signed off on a dramatic increase to the maximum daily fines for drilling infractions, from $1,000 to $15,000. Another committee approved a bill to require each oil and gas location to be inspected at least once a year, a significant increase.

More than a dozen additional proposals could come before state lawmakers in the next few weeks. Criticism of the industry shows no sign of abating after the state's drilling regulator, the Colorado Oil & Gas Conservation Commission, enacted tougher rules earlier this year. Lawmakers typically defer to the commission, but that could be changing.

The drilling debates threaten to fracture the Democratic majority in the Capitol. Democratic Gov. John Hickenlooper zealously defends the industry, especially the controversial drilling procedure of hydraulic fracturing, or fracking. The administration has vowed to sue cities and counties that try to ban the technique, which involves injecting high-pressure mixtures of water, sand or gravel and chemicals to extract oil and gas from rock.

Other Democrats say local governments should have the ability to prohibit practices they don't like, and that Colorado's historic deference to the energy industry has gone too far.

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The Legislature got a preview of fights to come Thursday when the fine hike came before the House Transportation & Energy Committee. The Democrat-led panel forwarded a proposal to hike fines that haven't been raised since 1955.

"This bill is about accountability and responsibility," said the measure's sponsor, Rep. Mike Foote, D-Longmont. His hometown has banned fracking and has been sued by the Colorado Oil & Gas Association, with Hickenlooper's administration taking the industry's side.

Foote argued Thursday that Colorado's drilling fines are outdated and less than in many other states.

"Right now our fine system is not adequate to keep those producers accountable," said Foote, who has sponsored another bill to reduce industry's influence on the regulatory commission.

The industry didn't fight the fine hike, but it suggested it needs more review.

"We'd like to have further discussions ... about what that number ought to be," said Jim Cole, COGA's lobbyist.

The industry fought harder against the increased inspections, which energy companies would have to pay for through increased taxes. A legislative estimate predicted that annual inspections would cost more than $8 million next year.

"We think this bill goes a bit too far," Cole said.

The sponsor of the inspections bill said that public distrust of the oil and gas industry in Colorado means that the industry could actually be helped by increased inspections. Sen. Matt Jones, D-Louisville, said that wells are currently inspected about every 3 1/2 years, leading to public concern about wells near homes and schools.

"Wells are not inspected frequently or thoroughly enough," Jones said.

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